Mobile Payments Turning Cash Obsolete in China
Remember when, not so long ago, we had news about how the central bank in China was smacking down a whole slew of retailers who refused cash in favor of mobile payments? That might have seemed like a backhanded endorsement of mobile payments sufficient for anyone, but new reports suggest that the central bank may also have to start smacking down the average Chinese citizen, who is increasingly foregoing cash in favor of mobile payments platforms.
The mobile payments market is expanding rapidly in China, hitting $17 trillion just in 2017, and 2018’s numbers will likely show an even greater climb in total usage numbers. This is in spite of not only several policy-based efforts to limit mobile payments’ growth—like requiring mobile payments firms to keep 100 percent of cash deposits in non-interest-bearing accounts—but also several attempts to squelch retailers who were planning to no longer take cash to begin with.
This led to the People’s Bank of China issuing a statement which noted “In recent years, there have been problems with the circulation of renminbi cash, and the people’s response has been intense. Consumers at tourist areas, restaurants, and retail merchants have had their cash refused, which has damaged the renminbi’s legal status and consumers’ right to choose between payment methods.”
We all know that choice is a good thing. Offering customers options means that you’re more likely to get—and keep—a customer because they don’t have to adapt their behavior to suit a business’ needs as the business will adapt its own behavior to suit the customer instead. Plus, the People’s Bank had to assert the requirement that the country’s own currency be usable inside stores in that country, otherwise its value might well have tumbled. It’s somewhat ironic that, after months of fighting mobile payments, the People’s Bank was actually, albeit briefly, confronted with a sure if gradual path to its own destruction despite literally everything the bank could do.
On this one, though, the normally totalitarian-tending government is right. Options are useful, cash is still a thing, and even as we enjoy our mobile payments it’s worth making accommodation for those who would rather not engage in mobile.